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Posted on: October 16, 2023

Mayor Releases Preliminary 2024 Budget

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Mayor Marc Nelson has released his 2024 preliminary budget that lowers the tax rate, continues to close the gap on the city’s longstanding deficit, maintains essential government services and makes critically important capital improvements.

The mayor’s on-time, $104,794,574 million budget plan, which includes a general fund appropriation of approximately $67,016,163 million, now goes to the Common Council for review and approval.

The 2024 budget proposed a property tax increase of 6.3 percent, which raises $1.25 million more than the 2 percent state property tax cap. At its last meeting of the year, the Common Council approved the 2024 budget on December 18, reducing a proposed 6.3 percent property tax increase to 4.75 percent largely by agreeing to using $400,000 in American Rescue Plan Acts funds instead of general funds to pay for replacement on departmental equipment expenses.

The mayor cited inflationary pressures, rising employee and retiree health care costs, mandatory pension contributions and the near depletion of the American Rescue Plan Act funds as the main reasons for the needed increase in property tax revenue. Mayor Nelson also said that emergency medical response services, once directly billed to individual insurances, will now fall on the city’s financial burden. They are expected to cost more than $500,000 per year. 

The city also has been operating without reserves since at least 2009, making budgeting more difficult than for most municipalities that have a fund-balance cushion to lean on during certain strategic times.

Mayor Nelson pointed out the city has remained under the property tax cap for six straight years while working to eradicate a $13.2 million general fund deficit the city had accrued as of January 2016. That deficit has been whittled to $2.8 million, and city officials expect the remaining general fund deficit will be retired in 2024 when results of the city’s 2022 audit are finalized. 

As a result, for the first time in more than a decade, the city has received “positive” outlooks from credit rating agencies. Mayor Nelson noted that better credit ratings can significantly reduce the costs of borrowing by recognizing lower financial risks to investors through low-interest rates.

“Still, with persistent inflation and contractual expenses rising, it is simply impossible to extend our streak of below-the-tax-cap budgets for a seventh year,” Mayor Nelson said in his budget memo. “We cannot go backward, and I urge my council colleagues to support the difficult decisions this budget makes — the future fiscal health of our city depends on it.”

“Having experienced the fiscal stress that can occur when an outgoing administration fails to properly budget for the needs of the next, I know firsthand how important it will be to our newly elected Mayor to enter office with the deficit nearly erased, an investment-grade quality bond rating restored, and a budget for the new year that accounts for reasonable revenues and accurate expenses,” Mayor Nelson said.

He continued, “The major cause of the city’s fiscal deterioration during the years 2008-2015 was poor budgeting. Frankly, that included an unwillingness to raise taxes in the face of economic headwinds. The result, however, cost taxpayers much more in terms of increased borrowing costs, and our bond rating fell, increasing our debt service costs. Deferred maintenance always ends up costing much more, and so it did.”

The mayor expressed optimism regarding the city’s future financial picture, citing, in part, the renegotiated 10-year sales tax agreement with Dutchess County and the City of Beacon — an effort that rebalances the county’s distribution of collected sales taxes and will provide the city millions of dollars more annually.

As property values have risen, the city has lowered the tax rate the last four years, and, under Mayor Nelson’s budget, the homestead tax rate would be $10.26 with a .1 percent decrease per $1,000 of assessed value, while the non-homestead rate would decline from $15.10 to $13.98 per $1,000 of assessed value, a 7.49 percent decrease.

As costs have risen due to inflationary demands, city officials said combined water and sewer bills for the average homeowner will increase by 6.1 percent, or $4.55 per quarter, but rates for city sanitation services will remain unchanged.

Mayor Nelson cited a number of public investment highlights from his 2024 budget plan, including:

•  Providing investments in the water pollution control plant for the first time in decades. 

•  Adding to the significant progress being made to rehabilitate and renovate all the city parks and pools, with Pulaski Park Pool House completion and reactivation set for 2024, and planning for Spratt pool house rehabilitation starting in 2024.  

•  Making upgrades to city’s firefighting equipment, including purchasing a new fire pumper truck and one new ladder truck.

•  Bolstering youth programming by adding more General Fund support for the city’s Youth Grant Program in light of the loss of ARPA funding that is being phased out.

•  Allocating some unspent ARPA funds for Ward-specific initiatives as proposed by City Council members.

•  Replacing three pieces of heavy equipment for the Department of Public Works to support snow removal, leaf pick-up and other seasonal maintenance work.

•  Beginning a new portfolio of improvements to replace city water, sewer and connected lead service lines while also starting the process of rebuilding and transformation of the sanitation transfer station which was recently severely damaged by fire.

•  Continuing the city’s Information Technology upgrades and advancing the city’s cybersecurity protections.

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